Trai cuts termination charge on mobile voice calls; Reliance Jio to gain

Trai cuts termination charge on mobile voice calls; Reliance Jio to gain

Trai cuts termination charge on mobile voice calls; Reliance Jio to gain

It is a negative for incumbent operators like Bharti Airtel and Vodafone because being bigger operators a large chuck of calls will be terminating on the networks of Bharti Airtel and Vodafone.

The termination charge is paid by the telecom operator from where the call is being made; to the telecom operator on whose network the call is being received.

Telecom regulator Trai today slashed the interconnect charges for mobile calls from 14 paise to 6 paise from October 1, which potentially blunts the advantage that legacy players like Airtel and Vodafone have had over a new entrant like Reliance Jio because of the asymmetry in call traffic.

Notably, the telecom disruptor Reliance Jio has been advocating lowering termination charges on grounds that it will benefit the customers.

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Reliance Jio, which has built up a subscriber base of 128 million since it started commercial operations last September on the back of its offer of free voice calls, had wanted the interconnect usage charge (IUC) cut to zero. While the new charges come into effect from October, the regulator has even laid the foundation to do away with the IUC altogether: the charges have been ordered to go down to zero from January 1, 2020.

"Whatever the Trai does, another court battle is on the cards". The existing operators have already been struggling because of the lowered revenue after huge cut downs in the prices of data packs and other telecom services.

The letter, accessed by BusinessLine, says that introducing a BAK regime or reducing the IUC in India is likely to have adverse consequences for investment and ultimately, it will be to the detriment of consumers. Jio also stated that it is of the opinion that waiving the charge will benefit consumers.

Established telecom operators have argued that every call on the network has a cost, and expenses of an incoming call on their network should be borne by the operator from whose network, the call has originated.

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